WASHINGTON (MarketWatch) -- Evoking its emergency powers to combat financial market stress, the Federal Reserve on Wednesday said it was lending $37.8 billion in additional cash troubled American International Group Inc. Under the program, the New York Federal Reserve Bank will borrow $37.8 billion in investment-grade, fixed-income securities from certain insurance subsidiaries of AIG in return for the cash.
AIG already has an $85 billion line of credit with the Fed. As of last week, AIG had used $60 billion of this loan, according to Fed data. This new program will allow AIG to replenish liquidity, the Fed said.